Yapizon Exchange Hack

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Yapizon had 37% of customer assets stored in hot wallets, which was more than 3 times the company’s annual revenue. The primary difference between Bitfinex and Yapizon is that Yapizon asked customers to “trust” in its practices, while Bitfinex made important security changes based on the breach. Yapizon focused on marketing by changing their name to Youbit, while nothing appears to have been changed to actually address the breach. As a result, the same service (now called Youbit) was again hacked before they could make any significant repayments, and losses of the subsequent hack were even larger. (You’ll see them again shortly in this list.)

This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea.

About Yapizon

“A South Korean bitcoin exchange called Yapizon was hacked for 3816 BTC or roughly $5.3 million USD worth of bitcoins on Saturday, April 22.” “In a notice on Saturday translated on social media, staff confirmed the theft of 3,831 Bitcoins, “equivalent to 37.08% of the total assets.”” “According to the bitcoin exchange Yapizon, four of the company’s hot wallets were compromised on April 22, between 2:00 to 3:00 in the morning.” “by an unknown group of hackers” “South Korea's Internet and Security Agency (Kisa)” “blamed the … attack … on cyber-spies working for North Korea.” “[T]he company has denied that any insider was involved in the event.” "Appearing to follow in the footsteps of fellow exchange Bitfinex after its hack last year, Yapizon said it would dock remaining customer balances by the same amount to spread the burden of the losses." “After many discussions, legal and accounting consultations and reviews, we have come to the conclusion that it should be applied fairly to all members. It is also the most common way to go through the liquidation process. The loss of 37.08% will have the same effect on all members' assets.” “Interim measures make reference to a sequential payment scheme where users will be repaid in so-called “fei” tokens, but the process appears overly convoluted.” “As seen in the security breach of Ethereum investment fund DAO that resulted in the loss of 3.6 million ETH and the hacking attack of Bitfinex which ultimately led to the loss of $70 million, Yapizon can certainly recover from the recent hacking attack. Yapizon entered the cryptocurrency industry four years ago and it is expanding services and operations rapidly across the region. From January to March of this year, Yapizon generated over $325,000 in profit and the company projects a total profit of $1.8 million by the end of 2017. If customers trust in Yapizon and its practices, the company believes it can make up for the losses of all customers relatively soon,” “However, this move is controversial because of the difference in the financial status of Bitfinex and Yapizon.”

This exchange or platform is based in South Korea, or the incident targeted people primarily in South Korea.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Yapizon Exchange Hack

Date	Event	Description
April 1st, 2017 12:00:50 AM	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost has been estimated at $5,300,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Prevention Policies

Coming soon.